The money will be spent in next five years and nearly 80 per cent of it will go towards improvement of the agriculture sector.
More than 100 farmers have allegedly committed suicide in the state in the wake of the drought.
Patnaik's announcement came at a farmers' rally convened by the ruling BJD at Sohela in Bargarh district of western Odisha.
He announced a slew of measures including one percent interest on agriculture loan and additional assistance of Rs 100 per quintal during procurement of paddy in the drought affected areas. The BJD party in its election manifesto had announced to lower the interest on agriculture loan.
The package includes Rs 8,000 crore for building of dams in the western part of the state. Two medium irrigation projects will be built in the Bargarh district. One will come up on river Aung at a cost of Rs 1,500 crore while the other will be on river Jeera at a cost of Rs 300 crore.
The state government will spend about Rs 13,000 crore for construction of separate feeder line for supply of power to the farmers and rural electrification. In a reprieve to the farmers, the state government has already decided to suspend collection of crop loan and extend the loan repayment period by three years.
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"My government has taken farmers' issue seriously. I have asked party MPs (members of parliaments), MLAs (members of legislative assembly) and other leaders to meet farmers and extend their help," said the Chief Minister.
He took a dig at the Centre stating that the Union government has not released a single penny as drought assistance till date while the state government has sanctioned Rs 1,000 crore for drought relief.
"Odisha faces natural calamities at every two years interval. Natural calamities like Phailin, Hudhud, drought and unseasonal rains have hit the state in last five years. The economy of the state has been hit, but the Centre has ignored the demand for special category status," said Patnaik.
Patnaik said, "We believe in deeds not in words. They (Opposition) are shedding crocodile tears by calling press conferences which will not resolve the problems of farmers."
The opposition is trying to weaken the farmers' confidence. They must stop politicising the plight of farmers, he added.
In retaliation, state unit of Bharatiya Jana Party staged a 12 hour hunger strike at Bhubaneswar.
"It is not a farmers' rally in western Odisha, it is the convention of the party workers. The convention is against the cause of the farmers", said Pratap Sadangi, senior BJP leader.